Surgery with a fiscal guarantee

Marketplace Staff Jun 8, 2009

Surgery with a fiscal guarantee

Marketplace Staff Jun 8, 2009


Bill Radke: Congress is focusing on health care reform this week. Lawmakers are trying to figure out how to cut costs without hurting the quality of care. Report Joel Rose says they might want to look to a Pennsylvania hospital where some surgeries come with a guarantee.

Joel Rose: At Geisinger’s hospital in Wilkes-Barre, Doctor Joseph Stella talks with a patient who’s scheduled for coronary bypass surgery.

Joseph Stella: You’ve been off the Olavix now for, since I told you last week, right?

Patient: Yeah.

Stella: OK, good.

The patient signs a contract promising to do his best to make the surgery a success. For their part, the doctors and nurses at Geisinger pledge that the operation will go smoothly. If it doesn’t, and the patient has to be re-admitted within 90 days, Geisinger eats the extra cost.

Alfred Casale: We’ve taken the costs for the entire hospitalization and rolled it into one packaged price.

Alfred Casale is a thoracic surgeon at Geisinger. He says the hospital introduced its new pricing policy three years ago, along with much more rigid standards about when and how to perform surgery. Casale says costs dropped, and patients spent 15 percent less time in the hospital.

Casale: Proving that better care does not have to be more expensive care, and many times can actually by more cost-effective and value-based care.

This is a major departure from how billing generally works. Most hospitals get paid by the service — meaning the more operations and tests a patient needs, the more money the hospital stands to make. At Geisinger, the hospital gets paid for performance.

Ron Paulus: The incentive was to do as good a job as possible, and to be rewarded if things go well. And frankly, to have a little bit of a penalty if things don’t go as well.

Vice president Ron Paulus says this sort of realignment was relatively easy at Geisinger, because many of his doctors are on salary. It might be a lot harder at hospitals where doctors get paid by the operation. But Paulus says this is something the Obama administration will have to grapple with if it wants to control exploding health care costs.

Paulus: This kind of episode bundled payment, just getting doctors and hospitals to work together along with the payer, is a great thing.

It’s worked so well for Geisinger that the hospital has expanded its price guarantee from coronary bypass surgery to nearly a dozen other procedures.

In Wilkes-Barre, Penn., I’m Joel Rose for Marketplace.

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